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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (2183)	9/19/2001 10:13:43 PM
From: Dan Duchardt	Respond to of 2241

Jacob, The options exchanges are pretty much self regulating when it comes to filling orders and standing behind their quotes. Most of them now claim that they stand ready to fill marketable orders to at least 10 and often 20 contracts, but they reserve the right to turn off auto execution and even back away from marketable orders in fast markets, something they do by their own discretion. As a small size palyer, I have seen lots of backing away, lots of instantaneous fills and everything in between. In your case, you are apparently sending large size limit orders away from market, and waiting for the market to move to your price. By doing so, you become the market. Whatever exchange receives you order places it in the book at your price, and when there are no longer any superior quotes, your bid is presented to the market as a quote from a willing buyer. At that time, your order is exposed to every small timer who might be looking for only 4 or 5 contracts, or even less. The specialist has no obligation to fill you when you place a non-marketable order, only to represent your order to the market. The 50 contract all-or-none idea might help in some cases, but generally the exchanges are not committing to fill orders of that size. You might be hurting your chances of getting filled in some conditions. My guess is you would do better limiting all-or-none orders to 20 contracts unless you have a broker who really works the order on your behalf. I'm hardly the expert in this area, but not all brokers are equal in this regard. If you are concerned about cost/contract, you might consider a broker that charges on a per contract basis, so the size of each fill does not matter. I happen to use Interactive Brokers for that very reason. They charge a flat $1.95 per contract regardless of size of the order. Dan